Understanding Performance Rights Organizations (PROs): A Comprehensive Guide

A Performance Rights Organization (PRO) is an intermediary entity that manages the public performance rights of songwriters, composers, and music publishers. It issues licenses to businesses and venues that play music publicly, collects licensing fees, and distributes royalties to the rights holders whose works are performed.

Etymology / Origin

The concept of a performance rights organization emerged in the early 20th century as a response to the growing use of music in public spaces without compensation to creators. The first PRO, the American Society of Composers, Authors and Publishers (ASCAP), was founded in 1914 by a group of prominent composers including Victor Herbert and John Philip Sousa. They recognized that while copyright law granted them the exclusive right to perform their works publicly, there was no practical way to enforce this right or collect fees from the thousands of venues using their music. ASCAP created a collective licensing model, allowing music users to obtain a single license covering the entire ASCAP catalog. This model proved successful and was later adopted by other organizations worldwide. In 1930, the Society of European Stage Authors and Composers (SESAC) was founded, initially representing European works, and in 1939, Broadcast Music, Inc. (BMI) was established by radio broadcasters to provide competition to ASCAP. Today, PROs operate in nearly every country, forming a global network that ensures songwriters are paid when their music is played anywhere in the world.

How It Works

PROs function as a bridge between music creators and music users. Here’s a step-by-step breakdown of the process:

1. Affiliation: Songwriters, composers, and publishers join a PRO as members. They grant the PRO the non-exclusive right to license their works for public performance.
2. Catalog Building: Members register their musical works with the PRO, providing details such as title, writers, and ownership shares. The PRO aggregates these into a vast catalog.
3. Licensing: The PRO issues blanket licenses to music users—venues, radio stations, streaming services, restaurants, retail stores, etc. A blanket license allows the user to perform any work in the PRO’s catalog for a set fee, typically based on factors like the type of business, capacity, and frequency of music use.
4. Monitoring and Tracking: PROs monitor performances through various methods: digital tracking of streaming and broadcast, cue sheets for TV and film, setlist reports from live venues, and statistical sampling for smaller establishments.
5. Fee Collection: The PRO collects license fees from all music users. These fees are pooled together.
6. Royalty Distribution: After deducting operating costs, the PRO distributes the remaining funds to its members based on the tracked performances. Distribution formulas consider the type and prominence of the performance, and often use a weighting system to ensure fair compensation.

This system allows a songwriter to earn income whenever their song is played on the radio, performed live, streamed online, or used in a business, without having to negotiate individual licenses with every user.

Legal & Licensing

The legal foundation for PROs in the United States lies in the Copyright Act of 1976, which grants copyright owners the exclusive right to perform their works publicly. PROs operate under consent decrees with the U.S. Department of Justice, originally put in place to prevent anti-competitive practices. These decrees require ASCAP and BMI to offer blanket licenses at reasonable rates and to accept all songwriters who apply. SESAC, being a for-profit entity, is not under a consent decree but still adheres to antitrust laws.

Licenses come in several forms:

• Blanket License: The most common, allowing unlimited use of the PRO’s entire catalog for an annual fee.
• Per-Program License: Used primarily by broadcasters, covering only specific programs that use music.
• Transactional License: For one-time events or specific uses, often negotiated directly.

For charity and benefit concerts, licensing requirements still apply. However, many PROs offer reduced fees or waivers for events that are purely charitable and meet certain criteria (e.g., no admission charge, all proceeds go to charity). Organizers should contact the PROs well in advance to secure the appropriate license and avoid legal issues.

Planning Checklist

Whether you’re a songwriter, venue owner, or event organizer, here’s a checklist for working with a PRO:

• For Songwriters and Publishers:
  • Research and choose a PRO that fits your needs (ASCAP, BMI, SESAC, or GMR).
  • Apply for membership and pay any applicable fees (ASCAP and BMI are free for songwriters; SESAC is invitation-only).
  • Register all your musical works accurately, including co-writers and publisher information.
  • Keep your catalog up to date with new works and any changes in ownership.
  • Report live performances of your songs, especially if you perform at venues that don’t submit setlists.
• For Venues and Event Organizers:
  • Determine if your event or venue requires a license (any public performance of copyrighted music likely does).
  • Contact ASCAP, BMI, and SESAC to inquire about licensing options and fees.
  • Obtain a blanket license if you host music regularly; for one-time events, ask about transactional licenses.
  • Submit setlists or music reports as required by the PROs to ensure accurate royalty distribution.
  • If hosting a charity event, request information on fee waivers or discounts.

Budget Considerations

The cost of a PRO license varies widely based on the type of music user. For a small restaurant or bar that features live music, annual fees might range from a few hundred to a few thousand dollars, depending on capacity and how often music is played. For a one-time charity concert, a transactional license could be as low as $25–$100, or even free if the event qualifies for an exemption. Factors influencing cost include:

• Venue capacity and type: Larger venues pay more.
• Frequency of music use: Background music vs. featured live performances.
• Revenue model: Whether the venue charges admission or sells food/drinks.
• PRO rate schedules: Each PRO has its own rate structure, often available on their websites.

For songwriters, joining a PRO is generally free or low-cost, but they should budget for the time spent registering works and tracking performances. The return on investment can be substantial if their music receives significant airplay or streaming.

Case Examples

1. ASCAP vs. Bar Owner (2018): ASCAP sued a small bar in Texas for playing copyrighted music without a license. The bar owner claimed ignorance, but the court ruled in favor of ASCAP, awarding statutory damages of $15,000. This case highlights the importance of obtaining proper licensing, even for small venues.

2. BMI’s COVID-19 Relief Fund (2020): During the pandemic, BMI launched a $5 million relief fund for songwriters and composers facing financial hardship due to canceled live performances. This initiative demonstrated how PROs can support their members beyond royalty distribution.

3. Charity Concert Licensing (2022): A nonprofit organized a benefit concert featuring local bands. By contacting SESAC in advance, they secured a discounted blanket license for the event, ensuring all songwriters were compensated while keeping costs low. The event raised over $50,000 for the cause.

Notable Examples in Songs

The following songs are among the most performed and have generated significant performance royalties through PROs:

• “Yesterday” – The Beatles
• “Bohemian Rhapsody” – Queen
• “Shape of You” – Ed Sheeran
• “Uptown Funk” – Mark Ronson ft. Bruno Mars
• “Rolling in the Deep” – Adele
• “Happy” – Pharrell Williams